Finding Text
Program Name and Awarding Agency: Education Stabilization Fund –84.425V, 84.425W, 84.425U, U.S. Department of Education, passed through Michigan Department of Education Literacy Excellence Accelerates Performance – 84.215G, U.S. Department of Education Supporting Educator Excellence and Knowledge – 84.374A, U.S. Department of Education Magnet Schools Assistance ARC (Academically Rigorous Choices) – 84.165A, U.S. Department of Education Head Start Cluster – 93.600, U.S. Department of Health and Human Services, passed through Washtenaw Intermediate School District Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance Questioned Cost Amount: None Context / Criteria: The Michigan School Accounting Manual (Bulletin 1022) serves as a mandatory guide to the uniform classification and recording of accounting transactions for Michigan public school districts. Furthermore, the School District shall not incur an expenditure against an appropriation account in excess of the amount authorized by the Board of Education. The School District is also responsible for comparing budget to actual expenses by function for programs. The School District should also import its original and final budgets into the accounting system to monitor spending and reduce errors in posting expenditures to the chart of accounts. Condition: The School District incurred material budget overages in multiple budgeted functions as adopted by the Board of Education and disclosed in the June 30, 2025 financial statements. Additionally, total actual expenditures of $91,760,599 exceed total budgeted expenditures of $75,840,532 by $15,920,067 in the General Fund. No adopted budget was provided for the Student and School Activities Fund. The final budget also was not imported into the School District’s accounting software. Cause / Effect: The budget was not properly monitored allowing the budget overages to exist. The School District has not established appropriate controls to ensure that the budget is monitored during the year and has overspent the Board-approved budget by a material amount. Additionally, the lack of budgets imported in the accounting software combined with the numerous federal and restricted state grants the School District receives increases the risk of the wrong account codes being used for expenditures which could have a material effect on reporting of Federal and restricted state grants. Recommendation: We recommend that the School District establish policies and procedures to ensure the budget is properly maintained and monitored throughout the year. An amended budget should be adopted throughout the year, as needed, to reflect changes in spending needs. Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.